112 Infrastructure Inquiry FINAL

PUBLIC ACCOUNTS AND ESTIMATES COMMITTEE 112th Report to Parliament Inquiry into Effective Decision Making for the Successful Delivery of Significant Infrastructure Projects December 2012 Ordered to be printed No. 205 By Authority Session 2010‑12 Government Printer for the State of Victoria CONTACT INFORMATION Address: Parliament of Victoria Spring Street EAST MELBOURNE VICTORIA, 3002 Telephone: +61 3 8682 2867 Facsimile: +61 3 8682 2898 Email: [email protected] Web: www.parliament.vic.gov.au/paec The following images used in this Report are reproduced with permission and copyrighted by their respective owners, as follows: myki logo – image on page 141; Melbourne Convention and Exhibition Centre ‑ photograph on front cover and page 169; Ethan Rohloff (Royal Children’s Hospital) – photograph on front cover and page 184; Victorian Desalination Plant – photograph on front cover and page 198; and Melbourne Markets Authority – photograph on front cover and page 220. Parliament of Victoria Public Accounts and Estimates Committee Inquiry into Effective Decision Making for the Successful Delivery of Significant Infrastructure Projects ISBN 978 0 9871550 9 2 ii CONTENTS Duties of the Committee � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � �xi Terms of Reference � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � xiii Acronyms and Abbreviations � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � xv Chairman’s Foreword � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � xix Findings and Recommendations of the Committee� � � � � � � � � � � � � � � � � � � � � � � � xxi CHAPTER 1 Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 1 1.1 Background to the Inquiry . 1 1.2 Scope of the Inquiry �� 2 1.3 The Committee’s work program �� 3 1.4 Structure of the report �� 4 1.5 Cost of the Inquiry �� 6 CHAPTER 2 Recommended Future Directions for Victoria’s Infrastructure Planning and Delivery � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 7 2.1 Introduction �� 7 2.2 Where to from here? �� 8 2.2.1 The Victorian Infrastructure Council – proposed roles and responsibilities . .10 2.2.2 The Victorian Infrastructure and Skills Authority – proposed roles and responsibilities . .11 2.2.3 Oversight and accountability. .14 2.3 Further reasons for change . 17 2.3.1 Serious instances of unsatisfactory performance . .17 2.3.2 The High‑Value and High‑Risk Framework . .19 2.3.3 Ensuring best practice is followed ��20 2.3.4 Problems with Major Projects Victoria ��22 2.3.5 Potential conflict and confusion in the Department of Treasury and Finance’s roles . .24 2.3.6 Responsibility for competencies and skills . .25 2.3.7 Retention of skilled staff within the public sector . .25 2.3.8 The need to be an ‘informed buyer’ ��26 2.4 Contemporary better practice informing the Committee’s recommendations ��27 CHAPTER 3 Term of Reference (a) – Requisite Competencies and Skills for Infrastructure Management � � � � � � � � � � � � � � � � � � � � � � � � � � � 29 3.1 The assessed scope of term of reference (a) ��29 iii Inquiry into Effective Decision Making for the Successful Delivery of Significant Infrastructure Projects 3.2 Responsibility for strategic policy and management of infrastructure skills across the public sector ��30 3.2.1 Absence of dedicated responsibility for infrastructure competencies and skills . .30 3.2.2 What action is required by the Victorian Government? ��33 3.3 Best practice public sector skills and competencies in major infrastructure projects ��34 3.3.1 Results of specialist research on best practice infrastructure competencies and skills . .35 3.3.2 Project governance . .52 3.3.3 Other matters relevant to infrastructure capability raised by Evans & Peck . .56 CHAPTER 4 Term of Reference (b) – Specification of Requisite Competencies and Skills � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 57 4.1 Introduction ��57 4.1.1 The assessed scope of term of reference (b) ��57 4.1.2 Infrastructure procurement models ��57 4.2 Victoria’s infrastructure management framework ��58 4.2.1 Australian Government ��58 4.2.2 Department of Treasury and Finance . .58 4.2.3 Department of Planning and Community Development ��59 4.2.4 State Services Authority . .59 4.2.5 Victoria’s constructing agencies . .59 4.2.6 Major Projects Victoria . .59 4.3 Central agency infrastructure documentation ��60 4.3.1 Agencies’ assessments of the guidance . .60 4.3.2 The Committee’s assessment of current guidance materials . .61 4.3.3 State Services Authority . .68 4.3.4 Department of Planning and Community Development . .69 4.4 Major Projects Victoria ��71 4.5 Constructing agency documentation ��71 4.5.1 Better‑practice articulation of competencies and skills for infrastructure management . .72 4.5.2 Sharing information about competency and skill requirements �� 74 4.6 Private sector service provider competencies and skills . 74 4.7 Future directions ��76 CHAPTER 5 Term of Reference (c) – Development, Refinement and Enhancement of Skills � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 79 5.1 The assessed scope of term of reference (c) ��79 iv Contents 5.2 Identifying competencies and skills gaps ��79 5.2.1 Unaddressed skills gaps ��80 5.2.2 Current processes for identifying skills gaps . .83 5.3 Developing the required competencies and skills ��86 5.3.1 Centrally facilitated training . .87 5.3.2 Training organised by agencies . .89 5.4 Ongoing enhancement and refinement of competencies and skills ��95 5.4.1 Identifying lessons learnt and best practice . .95 5.4.2 Sharing knowledge within agencies ��97 5.4.3 Sharing knowledge across the Victorian public sector . .99 5.4.4 Learning from other jurisdictions . 105 CHAPTER 6 Term of Reference (d) – Alignment of Projects with the Public Interest and Maximisation of Transparency Accountability over the Project Life � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 109 6.1 The assessed scope of term of reference (d) �� 109 6.2 Alignment with the ‘public interest’ for the life‑cycle of the project . 109 6.3 Maximising transparency and accountability for the life‑cycle of the project �� 110 6.3.1 Access powers of the Committee and the Ombudsman . 111 6.3.2 Power of the Auditor‑General to access private sector documentation . 111 6.3.3 Committee’s examination of Gateway Review documentation. 112 6.4 Capturing lessons learnt for application to future infrastructure projects �� 113 6.5 Projects selected for this Inquiry . 113 6.6 The HealthSMART Program �� 115 6.6.1 Committee’s approach ��115 6.6.2 Project synopsis . 116 6.6.3 The Department of Treasury and Finance’s involvement in the project ��121 6.6.4 Project reviews . 122 6.6.5 Alignment with the public interest and value‑for‑money . 124 6.6.6 Maximising transparency and accountability ��131 6.6.7 Competencies and skills on the project ��

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